350-401 Infrastructure Practice Question
A network engineer is configuring a GRE tunnel between two Cisco IOS routers to transport multicast traffic and routing protocols across an IP network. Which two statements about GRE tunnel configuration and operation are true? (Choose two.)
⚠ Common exam trap
The trap here is assuming that GRE provides encryption or that it only supports unicast traffic, when in fact it supports multicast and broadcast but lacks encryption.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
GRE tunnels support multicast and broadcast traffic by default.
GRE tunnels support multicast and broadcast traffic, making them suitable for carrying routing protocol hellos and other multicast applications. Additionally, the tunnel source and destination must be reachable via the underlay network for the tunnel to come up. GRE does not provide encryption, and tunnel interfaces are typically assigned IP addresses from a separate subnet, not the same as physical interfaces.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
GRE tunnel interfaces must be assigned an IP address from the same subnet as the physical interfaces.
Why it's wrong here
GRE tunnel interfaces are logical interfaces and are typically assigned an IP address from a separate subnet, often a /30 or /31, to create a point-to-point link. They do not need to be in the same subnet as the physical interfaces. In fact, using a separate subnet is standard practice to avoid routing conflicts and to clearly separate tunnel traffic from underlay traffic.
- ✓
GRE tunnels support multicast and broadcast traffic by default.
Why this is correct
GRE is designed to encapsulate a wide variety of protocols, including multicast and broadcast. When you configure a GRE tunnel, it acts like a virtual point-to-point link that can carry multicast traffic, which is essential for routing protocols like OSPF and EIGRP that use multicast hellos. This is a key advantage over IPsec tunnels, which typically only support unicast unless specifically configured with GRE.
- ✗
GRE tunnels can only carry unicast IP traffic.
Why it's wrong here
GRE tunnels can carry multicast, broadcast, and non-IP protocols, not just unicast IP. This is one of the main reasons to use GRE: to transport multicast traffic for routing protocols or to tunnel non-IP protocols like IPX or AppleTalk. The statement is incorrect because it limits GRE to unicast IP, which is not true.
- ✓
The tunnel source and tunnel destination must be reachable via the underlay network.
Why this is correct
For a GRE tunnel to become operational, the tunnel source and destination addresses must be reachable through the underlying IP network. The tunnel endpoints must be able to route packets to each other; otherwise, the tunnel interface will remain down. This is a fundamental requirement for any tunnel technology that relies on an existing transport network.
- ✗
GRE tunnels automatically encrypt all traffic passing through them.
Why it's wrong here
GRE does not provide any encryption by default. It only encapsulates packets with a GRE header. To secure traffic, you must combine GRE with IPsec, typically using a crypto map or tunnel protection. Without IPsec, GRE traffic is sent in clear text, which is a common misconception and a security risk if sensitive data is transmitted.
Visual reference
Quick reference
Routing Protocol Comparison
| Protocol | Metric | Max Hops | Algorithm | Type |
|---|---|---|---|---|
| RIP v2 | Hop count | 15 | Bellman-Ford | Distance vector |
| OSPF | Cost (bandwidth) | Unlimited | Dijkstra (SPF) | Link state |
| EIGRP | Composite metric | Unlimited | DUAL | Hybrid |
| IS-IS | Cost | Unlimited | Dijkstra | Link state |
| BGP | Policy / attributes | Unlimited | Path vector | Path vector |
RIP's 15-hop limit makes it unsuitable for large networks. OSPF and EIGRP dominate modern enterprise deployments.
Go deeper
Related to this question
Learn chapter
EIGRP: Basics and Advanced Configuration
Key term
GRE
GRE (Generic Routing Encapsulation) is a tunneling protocol that encapsulates packets inside other packets to transport them across incompatible networks.
Key term
GRE Tunnel
A GRE tunnel is a method that wraps one network protocol inside another, allowing data to travel across a network that might not support that protocol directly.
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JA
Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official Cisco exam blueprint
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